The Federal Budget: Economics and Politics

The Federal Budget: Economics and Politics

The Federal Budget: Economics and Politics

The Federal Budget: Economics and Politics

Excerpt

Spending by the federal government has been a growing concern to analysts and policymakers since the mid-1970s, when federal budget deficits began rising to levels unknown since the end of World War II. The reasons behind the spending increases involved a combination of economic theories that played down the importance of budget deficits and steadily growing revenues made available because of "bracket creep"--tax increases caused by inflation and the unindexed tax code.

In the last two years of the Carter administration, anxiety about spending and the budget reached fever proportions. However, worries about the overall budget--including both spending and taxing--have dominated public policy headlines throughout most of 1982. One reason for the concern is that unlike original projections, which showed a real decline in deficit spending, the Reagan administration is currently projecting increasing deficits, exceeding $100 billion, for each of the next several fiscal years.

The short-term problem arises from a combination of large tax cuts enacted in 1981, substantial increases in the defense budget projected over the next couple of years, and ongoing increases in many other parts of the budget, following patterns begun in the last half-decade.

This study, which considers both taxing and spending but emphasizes the spending side of the budget, follows an earlier study published in 1978--Federal Tax Reform. Since the budget problem involves important economic and political issues, we asked an economist, Michael Boskin, and a political scientist, Aaron Wildavsky, to coedit the book.

The issues considered are fairly straightforward. We wanted to examine options for controlling the budget as well . . .

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